There are SO MANY projects you could do on image processing... the first to come to my mind is for example a simple object recognizing robot/system with DSPs.
A camera grabbing images, and comparing each frame with a known image in database, by correlation...
there is finger print recognition project I think it is so good project and at the same time it will not be hard for you to find refferences in this topic
1. Eigen Faces Method on wjich a lot help is available
2.Geometrical Feature Based Approcah (its relatively easy but unaccurate)
3. Then you can proceed to Improvemnts